Our law firm helps individuals and companies fight against claims, charges and allegations of federal copyright infringement. Federal copyright law is a very powerful law for copyright holders, and lawsuits involving infringement can be some of the most damaging allegations made against you or your brand which your opponent will try to paint as a “pirate” or “infringer.” When this happens, you need intellectual property litigators at your side.
Overview of federal copyright infringement and possible defenses – I have a license!
One defense that can be raised in a copyright infringement case is that you have a valid license to use the copyrighted work. This could include either a oral license, or a written license which allows you to use the copyright work, or you could have an “implied license.” As a legal matter, implied and oral license present the toughest issue.
Implied license
As the Federal Court discussed in John G. Danielson, Inc. v. Winchester-Conant Properties, Inc. (1st Cir. 2003) 322 F.3d 26, 40-41:
“The burden of proving the existence of such a license is on the party claiming its protection, the licensee. Implied licenses are found only in narrow circumstances. The touchstone for finding an implied license, according to this framework, is intent without intent, there can be no implied license. License is found from copyright owner's grant of “permission to use”)……our analysis of these decisions … suggests that the existence of an implied nonexclusive license in a particular situation turns on at least three factors:
(1) whether the parties were engaged in a short-term discrete transaction as opposed to an ongoing relationship;
(2) whether the creator utilized written contracts providing that copyrighted materials could only be used with the creator's future involvement or express permission;
and
(3) whether the creator's conduct during the creation or delivery of the copyrighted material indicated that use of the material without the creator's involvement or consent was permissible.
You can apply these factors in your case to determine whether you think this might apply to your use of the copyrighted product. In the 9th Circuit (which covers California, Washington, Oregon, and Arizona) Asset Marketing Systems, Inc. v. Gagnon (9th Cir. 2008) 542 F.3d 748, 756 the court discuss the “intent element” for granting an implied license: “Gagnon argues that he never intended that AMS would retain and modify the programs he delivered. Gagnon misunderstands the inquiry into intent, and we conclude that his conduct did manifest an intent to grant a license. The relevant intent is the licensor's objective intent at the time of the creation and delivery of the software as manifested by the parties' conduct. See Effects, 908 F.2d at 559 n. 6 (noting that “every objective fact concerning the transaction” supported the finding that an implied license existed); see also John G. Danielson, Inc. v. Winchester-Conant Props., Inc., 322 F. 3d 26, 42 (1st Cir.2003); I.A.E., 74 F. 3d at 777. This highlights the importance of closely examining the facts in your copyright infringement case.
“A license is a defense to a claim of copyright infringement.” Teter v. Glass Onion, Inc., 723 F. Supp. 2d 1138, 1147 (W.D. Mo. 2010) (quoting Oddo v. Ries, 743 F.2d 630, 634, n. 6 (9th Cir. 1984)). While a copyright owner may expressly grant a license to use the copyrighted work, a nonexclusive implied license can be granted verbally or implied from conduct.
“[C]onsent given in the form of mere permission or lack of objection is also equivalent to a nonexclusive license and is not required to be in writing.” I.A.E., Inc. v. Shaver, 74 F.3d 768, 775 (7th Cir. 1996).
Generally, a court can find an implied license “where the copyright holder engages in conduct from which [the] other [party] may properly infer that the owner consents to his use.” Parker v. Yahoo!, Inc., 2008 WL 4410095, at *3 (E.D. Pa. Sept. 25, 2008) (quoting Field v. Google, Inc., 412 F. Supp. 2d 1106, 1116 (D. Nev. 2006) (quoting De Forest Radio Tel. & Tel. Co. v. United States, 273 U.S. 236, 241 (1927)
Silence or lack of objection may also be the equivalent of a nonexclusive license, especially where the plaintiff knows of the defendant's use and encourages it. See e.g., Field, 412 F. Supp. 2d at 1116
SOFTWARE INFRINGEMENT CASE: See Keane Dealer Servs., Inc. v. Harts, 968 F. Supp. 944, 947 (S.D.N.Y. 1997) (software developer's knowledge that user was using software, coupled with developer's silence, constituted implied license for user to use software)
Oral License
The concept or oral license was discussed in Crispin v. Christian Audigier, Inc. (C.D. Cal. 2011) 839 F.Supp.2d 1086, 1092:
Under section 101, “nonexclusive licenses” are expressly excluded from the definition of “transfer of copyright ownership.” Nonexclusive licenses can therefore be granted without compliance with section 204(a)'s writing requirement. Under this “narrow” exception to section 204(a), Effects Associates, 908 F.2d at 558, a nonexclusive license can be transferred by express oral agreement or by implication. Foad Consulting Group, Inc. v. Azzalino, 270 F.3d 821, 826–828 (9th Cir.2001) (so stating). An oral agreement, like a written one, can have both express terms and implied terms. But when the agreement is oral, the lack of a writing is an evidentiary problem that makes it more difficult to determine what the express terms are. See 3 Melville B. Nimmer & David Nimmer. Nimmer on Copyright § 10.03[A][7] (2001) (discussing difficulty of ascertaining terms of oral license).
Written License
A written agreement to license software is an example of a written licensing agreement. When your company “buys” copyrighted software, in most cases, you are merely “licensing” the right to use the software subject to some exceptions. This concept was discussed in Vernor v. Autodesk, Inc. (9th Cir. 2010) 621 F.3d 1102, 1110-11:
“We read Wise and the MAI trio to prescribe three considerations that we may use to determine whether a software user is a licensee, rather than an owner of a copy. First, we consider whether the copyright owner specifies that a user is granted a license. Second, we consider whether the copyright owner significantly restricts the user's ability to transfer the software. Finally, we consider whether the copyright owner imposes notable use restrictions. Our holding reconciles the MAI trio and Wise, even though the MAI trio did not cite Wise. See Cisneros-Perez v. Gonzales, 451 F.3d 1053, 1058 (9th Cir.2006) (“[W]e are required to reconcile prior precedents if we can do so.” In response to MAI, Congress amended § 117 to permit a computer owner to copy software for maintenance or repair purposes. See 17 U.S.C. § 117(c); see also H.R.Rep. No. 105-551, pt. 1, at 27 (1998). However, Congress did not disturb MAI‘s holding that licensees are not entitled to the essential step defense
The terms of your software license agreement may need to be reviewed, for example in a BSA software audit. Copyright licensing issues can be very complex. For example, we have tried to review a Getty images copyright license agreement. You should try to read through this when you have some free time. It can be very difficult to understand what your rights and limitations are, and there are some terms, words, and phrases (not to mention complex legal concepts) that contain a high degree of ambiguity basically needing an intellectual property lawyer to review and try to decipher it.
Failure to Mitigate Damages
Sometimes you will have a software company using "phone-home" technology to track unlicensed usage of software. Some of these "hits" or "instances of uses" as we call it can go back to 2017, 2018, 2019 or later. This raises not only a potential statute of limitations issues (generally, three years from the date of discovery) but also a potential "failure to mitigate damages." A company cannot just sit around and "rack up the damages." Here is some case law on point.
“A plaintiff has a duty to mitigate damages and cannot recover losses [he] could have avoided through reasonable efforts.” Binder v. Disability Group, Inc., 772 F. Supp. 2d 1172, 1184 (C.D. Cal. 2011). “Defendants bear the burden of establishing that Plaintiffs failed to mitigate.” Id. 102. JUUL started investigating the infringement in October 2019, but did not notify CJ of an issue until April 2021 when the lawsuit was filed. 103. In other contexts, courts have found no duty to mitigate where the plaintiff seeks statutory damages rather than actual damages. Ahmed v. HSBC Bank USA, Nat'l Ass'n, No. EDCV 15-2057 FMO (SPx), 2017 WL 5720548, at *2 (C.D. Cal. Nov. 6, 2017) (“the weight of available authority indicates that there is no duty to mitigate statutory damages in these [TCPA] cases.”) (quotation marks omitted) (collecting cases); Miholich v. Senior Life Ins. Co., No. 21-1123 WQH (AGS), 2022 WL 1505865, at *7 (S.D. Cal. May 12, 2022) (striking the affirmative defense of failure to mitigate where a plaintiff sought only statutory damages for a TCPA claim); Garcia v. Mickey Fine Enterprises, Inc., No. EDCV 21-1056 JGB (SHKx), 2022 WL 2168886, at *3 (C.D. Cal. Jan. 7, 2022) (“the only damages Mr. Garcia seeks are statutory damages under Section 52(a) of the California Civil Code. As such, mitigation is irrelevant.”); Energy Intelligence Grp., Inc. v. Kayne Anderson Capital Advisors, L.P., 948 F.3d 261, 265 (5th Cir. 2020) (“We hold that failure to mitigate is not a complete defense to copyright or DMCA claims for statutory damages.”); Malibu Media, LLC v. Doe, No. 13-cv-30, 2013 WL 4048513, at *2 (N.D. Ind. Aug. 13, 2013) (“Having elected statutory damages, [the plaintiff] has given up the right to seek actual damages, thereby making a failure-to-mitigate defense inapplicable”); Malibu Media, LLC v. Batz, No. 12-01953 RBC, 2013 WL 2120412, at *2 (D. Colo. 2013) (“T]he Court agrees that a copyright plaintiff's exclusive pursuit of statutory damages invalidates a failureto-mitigate defense”); Malibu Media, LLC v. Doe, No. 13-3648 MFK, 2014 WL 2581168, at *5 (N.D. Ill. June 9, 2014) (striking failure to mitigate defense where defendant conceded that it did not apply since the plaintiff elected only statutory damages). 104. CJ's affirmative defense of failure to mitigate is not relevant to JUUL's claim for statutory damages. This is particularly so in a case where the analysis of the appropriate amount of damages was more heavily dependent on the nature of Defendant's conduct rather than the amount of actual damages."
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Some other potential defenses or mitigating factors to consider
Here are some other potential defenses. To view more, click on our helpful copyright damages video below.
- Innocent infringement
- Third party is liable
- Illegal spyware tracking
- IP spoofing
- Entrapment
- Copyright Misuse
- Unclean hands
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Statue of limitations
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Copyright Infringement Lawyers
If your company is facing copyright infringement issues (ex charged with a accused of a criminal copyright matter or willful copyright infringement), or breach of software licensing agreement, including software compliance investigations that threaten infringement lawsuits, give us a call to discuss your case in confidence. We can reached at (877) 276-5084. If you prefer, you can fill out the form below and have one of our lawyers contact you. We offer low flat rate fees in BSA software license and copyright infringement cases.
